The findings come from the NAR’s recent Housing Opportunities and Market Experience (HOME) survey. The survey also found that renters may be unnecessarily delaying buying a home because of misconceptions about how large a down payment they’ll need.
According to the survey, the share of homeowners and renters who believe it’s a good time to buy remains strong, but has crept downward. In June, 80% of homeowners and 62% of renters believed it was a good time to buy. In the most recent survey, those numbers had dropped to 78% and 60%, respectively.
NAR chief economist Lawrence Yun said confidence is being eroded by ongoing price gains and severe inventory shortages.
“This summer’s historically low mortgage rates injected some additional demand into the market, but the dearth of homes for sale continues to keep a lid on sales but not on prices,” he said. “Given the still competition and limited homes available at the lower end of the market, it’s not surprising at all that those under the age of 34 and in the West are the least confident about it being a good time to buy.
“Very affordable mortgage rates and strong job gains among young adults should be translating to a higher rate of homeownership,” he said. “It’s not, and as a result, sales to first-time buyers remain stuck below a third of all sales.”
The survey also found that awareness of low-down-payment mortgage options lagged across all age groups, income brackets and education levels, according to the NAR. Fever than 20% in each group knew they could finance their home with 10% or less down. People 65 and older or under the age of 35 were most likely to believe they needed more than 20% down, according to the NAR.
“It’s possible that some of the hesitation about buying right now among young adults is from them not realizing there are mortgage financing options available that do not require a 20% down payment, which would be north of $100,000 in some expensive areas in the country,” Yun said. “In fact, most first-time buyers put down much less. In the 35-year history of NAR’s Profile of Home Buyers and Sellers – the longest-running survey series of national housing data – the average median down payment has been 5% for first-time buyers.”
Continued home price growth and tight supply are dealing a blow to renters’ confidence about buying a home, according to new data from the National Association of Realtors.